HMRC said the Managing Serious Defaulters unit will, from 1 April, monitor the tax affairs of more individuals and businesses which “deliberately choose not to pay what they owe”. It added that the MSD “will ensure that they comply with their tax obligations and permanently change their behaviour”.
David Gauke, exchequer secretary to the Treasury, said: “Increasingly, evaders are using contrived insolvency to evade tax, either through liquidation of a business or bankruptcy of an individual. It is only fair that someone who has deliberately tried to evade tax should face extra scrutiny from HMRC.
“This measure, along with those announced in the Budget, demonstrates that we will crack down on people who don’t pay what they owe.”
The MSD replaces and expands the Managing Deliberate Defaulters scheme, which was launched in 2011, and, said HMRC, "aims to keep tax cheats on the straight and narrow through close monitoring". HMRC added that early indications suggest those monitored are changing their behaviour, leading them to disclose concealed income and amend previous tax returns.
In a related announcement, HMRC said it had won a court battle with FTSE 100 company Land Securities which had tried to avoid paying around £60m in tax. According to HMRC, Land Securities sold shares in one of its group companies to a Cayman Island subsidiary of US investment bank Morgan Stanley, which then inflated the value of the shares by pumping money into the subsidiary.
Land Securities bought back the shares at the inflated price, claiming that the effect of an existing anti-avoidance rule was that they had made a “loss” of £200m that could be used as a deduction against tax. The company claimed, in tribunal, that disallowing the loss would not be fair as it would be out of pocket if it sold the shares in the future. The tribunal disallowed the loss.